Along with many other emerging markets, many African countries, on the back of increased political stability and the recent commodities boom, have experienced tremendous growth over the last decade.

And while Africa has by no means escaped the global economic downturn, the Organisation for Economic Co-operation and Development has still predicted growth at 2.8% for 2009, albeit against an original expectation of 5.7%.

Consolidation among financial institutions and increased regulation before the financial crisis hit, together with little, if any, exposure to sub-prime, has meant that many African banks and financial institutions have come out of the financial crisis in relatively good shape.

Where there have been issues local regulators have been quick to step in, for example, the recent rescue and restructuring of various banks by Nigeria's central bank. While the downturn of the last two years has had an effect, whether through mines being put on care and maintenance programmes or reduced foreign remittances, the recent recovery in commodity prices has provided a welcome fillip. That being said, infrastructure issues, in particular power and transport, remain significant barriers to investment, as do concerns with corruption and the ability to successfully enforce contractual rights.

Private equity, through the likes of Actis, ECP and Afrinvest, has long since targeted the continent, as have sector-specific investors such as First Reserve and Globeleq. Both the range and size of funds, however, has mushroomed over the last few years and, in what has been an extremely tough market, fund raising is holding up. Actis' recent final close of its infrastructure fund at $750m (£450m) was, while below its target, a hugely impressive feat given the market and the fund size.

This is partly down to a return of intellectual capital as the diaspora, having cut their teeth in Western financial institutions, are making those skills work in Africa. There is also recognition among investors that the super-returns made over the last few years in the Western markets are unlikely to be achieved again now that those markets are effectively saturated. There has also been a change in attitude towards aid. There is a recognition that aid has not necessarily been good for Africa and that growth could better be achieved by more direct investment including through infrastructure, microfinance, private equity and other funds.

To date private equity has focused on growth and development opportunities in most of Africa with a traditional buy-out market only really existing in South Africa and, to a lesser extent, Egypt. This is likely to change, not least given the number and size of funds being raised and the trend for the large South African funds and MENA region funds to focus outside their traditional markets. Africa's potential is enormous – Egypt and Nigeria are part of Jim O'Neill's 'Next 11′ countries, the ones to watch after the BRICs. Cairo, Lagos and Kinshasa will be among the 21st century's super-cities.

While sourcing deals will always be a challenge, perhaps the biggest issue facing private equity in Africa concerns exits. Local stock markets are achieving critical mass, especially in Lagos and Cairo, and the Johannesburg stock exchange is long established, but volatility remains high and may simply not represent an attractive exit. Trade sales remains the exit of choice, though secondary sales to the larger private equity funds may become an increasingly viable option.

That private equity has a huge part to play in unlocking Africa's potential, especially given the need for infrastructure development and the growing consumer markets, is beyond doubt and will be a journey worth following.

Hugh Naylor is a corporate partner at Denton Wilde Sapte.